Selling on price seems like the easy way out in sales. If you have no other arguments, just drop the price until you get the order. But unless the ability to produce at lower cost than anybody else is the company’s primary strength, this behavior doesn’t lead to long-term success. Instead, it will cause unnecessary price wars and probably economical failure sooner or later. This is why more and more companies tell their sales people to sell on value and not on price.
They invest in tactical sales trainings where sales people are trained to use value arguments and defend prices. This is a step in the right direction and can significantly contribute to the company’s success, but if this is the only measure, it’s not enough.
Without further support, the sales people are still left alone with the task to assess the customers’ needs and develop the value arguments on a case-by-case basis. Since knowing the customer needs and decision criteria are the most important prerequisites for being successful in sales, it is worth investing more to support the sales staff.
Each customer is different, and assessing the needs is one of the most important and most challenging tasks a sales person encounters in his daily life. This is why the Probe Phase plays a dominant role in the sales cycle in the ASPEC sales model. In most cases, companies do not have the one unique selling proposition which clearly differentiates it from the competition, something that provides an outstanding utility to all the customers. It is rather a complex mix of various utilities to which the potential customer will allocate different weights.
Some attributes of a product or service may be well differentiated against the competition, but the customer gives them little weight so that they don’t serve as a valid argument. Others may only be slightly differentiated, but due to the important utility they provide to the customer, they have a huge impact on the selling position. Especially in B2B businesses, this can be quite complex because the value of an offering is composed of many different attributes, not limited to product features but also including various service aspects and even the brand reputation.
A salesperson must have a lot of experience to accurately assess this valuation profile for each customer and product. And even then, experienced sales people wouldn’t do it from scratch for every individual customer. Rather, they would enter into the probing activity with some kind of hypothesis for the most likely valuation profile and then adjust it according to their findings. Nevertheless, this is very seldom based on a systematic approach. Most of the time it comes from gut feeling and that’s why this process is insecure and error prone.
The key to more effective value-based selling can be found in market segmentation. It is true that all customers are different, but they can be grouped in segments where clients show similar preferences, usually driven by different use of the product or service. Using the experience and knowhow of their own sales force, companies can work out the typical valuation profile for each of these segments. The sales person can then use this profile as a first hypothesis when starting the probing process. The task for the sales person is then to find the deviations in each specific case and fine-tune the value argumentation for the individual customer. This is a much easier and effective method than starting each sales cycle from scratch.
Knowhow transfer between sales people, particularly from experienced to less experienced sales people, is difficult if not impossible. This is why the company should not leave it to the sales person alone. Doing so would mean wasting opportunities. A well-managed CRM system with carefully documented customer interactions will offer tremendous help for assessing customer needs and preferences in different market segments and in creating argumentation guidelines for the sales force.
Strategies and tactics for value-based selling can be developed for the whole sales force instead of exclusively relying on the skills of each individual sales person. The sales people can then concentrate on their main task, which is to find out which needs and preferences are driving the individual customer’s buying process. The organization will continuously learn about the market and become better and better. The company will win more opportunities and negotiate better prices.